CoStar Group posted 23% revenue growth and doubled adjusted EBITDA, but ongoing investment in Homes.com and weaker GAAP profitability keep the stock at Hold. The commercial franchise remains strong, yet the valuation already reflects a meaningful recovery.
CoStar Group (CSGP) earns a Hold rating with a fair value estimate of $44.00. The company combines a durable commercial real estate data franchise with faster-growing residential marketplaces, but the investment case remains tied to the conversion of strong revenue growth into sustained GAAP earnings and cash flow.
Q1 2026 revenue reached $897M, up 23.0% year over year, while adjusted EBITDA doubled to $132M. Annualized net new bookings rose 20.0% to $67M. Management also raised full-year adjusted EBITDA guidance to $780M-$820M and adjusted EPS guidance to $1.32-$1.39.
The counterweight is profitability quality. FY2025 operating income was negative $72M and net income was only $7M on $3.2B of revenue. Cash fell from $3.8B in Q1 2025 to $1.3B in Q1 2026 as CoStar funded Homes.com investment, acquisitions, capital spending, and buybacks. The business is improving, but the stock already prices in a meaningful recovery.
CoStar Group is a real estate information, analytics, marketplace, and workflow technology company founded in 1986 and headquartered in Arlington, Virginia. The company had 8,441 employees and operates across the United States, Canada, the United Kingdom, France, Australia, Europe, Asia Pacific, and Latin America.
Its portfolio spans commercial real estate intelligence through CoStar, commercial listings through LoopNet, multifamily marketing through Apartments.com, residential listings through Homes.com, Domain, and OnTheMarket, and specialized marketplaces such as Land.com, Ten-X, and BizBuySell. Matterport adds 3D digital-twin technology to the platform.
The recurring model provides useful revenue visibility. Subscription revenue represented 93.0% of 2025 revenue in company materials, while annual contracts represented 73.0% of Q1 2026 revenue. Company-wide renewal rates held at 89.0% for seven consecutive quarters, and customers with at least five years of tenure renewed at a 95.0% rate.
The strategic challenge is portfolio balance. CoStar's commercial business already produces substantial earnings, while Homes.com and other residential assets require large investments before they reach their full economic potential. That creates a stronger long-term platform, but also makes near-term margins more difficult to read.
Commercial revenue was $472M in Q1 2026, up 15.0% year over year, with adjusted EBITDA of $161M and a 34.0% margin. The commercial segment remains the company's earnings engine, providing the cash-generating base that supports residential expansion.
CoStar revenue increased 9.0% to $331M. Users grew 22.0% to 317,000, core product annualized net new bookings rose 16.0%, broker sales increased 29.0%, and tenant sales increased 27.0%. LoopNet revenue rose 16.0% to $85M, supported by paid listing growth of 10.0% in the United States, 35.0% in Canada, and 63.0% in the United Kingdom.
Residential revenue was $425M, up 32.0% year over year, while adjusted EBITDA improved by $56M to negative $29M. Apartments.com generated $312M of revenue, up 10.0%, and Homes.com revenue increased 58.0% to $26M. Management expects the residential segment to reach positive adjusted EBITDA in Q2 2026.
Other commercial revenue was $56M, up 81.0%, primarily reflecting the inorganic contribution from Matterport. Matterport subscription revenue rose 19.0%. BizBuySell added $8.8M of Q1 revenue and recorded 2,345 completed business sale transactions representing $2.0B of enterprise value.
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CoStar Suite remains the flagship information product. Its 317,000 users, 92.0% quarterly renewal rate, and NPS of 69 show a product embedded in the daily workflow of brokers, landlords, tenants, lenders, and investors. The combination of property records, lease data, transactions, ownership information, and market analytics raises the cost of replacing the service.
The product roadmap expands the commercial data moat. CoStar rent benchmark is scheduled for a summer launch with data on starting rents, effective rents, tenant improvements, free rent, and escalations. CoStar New Homes is being developed from planning through delivery, while Debt Solutions crossed $100M of revenue and serves more than 500 financial institutions.
Homes.com is the portfolio's most important growth product. It had 35,175 agent subscribers, 76.0% of them on annual contracts, and a March annual revenue run rate of $106M, up 92.0% year over year. The first 11,400 member analysis showed average commission gains of $36,400 against an average annual subscription cost of $3,400.
Homes AI strengthens the product economics. AI users ran nearly four times as many searches, favorited seven times as many properties, and submitted seven times as many leads as conventional users. In April, AI users spent 18 minutes on site compared with 4 minutes and 32 seconds for non-AI users.
CoStar's advantage comes from the interaction of proprietary data, brand reach, marketplace liquidity, and workflow integration. A listing marketplace becomes more useful as it attracts more listings and visitors. An analytics product becomes harder to replace as customers build decisions and processes around its data.
Matterport adds a differentiated visual layer. The platform includes more than 14 million spaces and over 70 billion square feet digitized across 177 countries. On Apartments.com, listings with Matterport generated 56 times more tour requests per listing than listings without it, while renters spent 46.0% more time on those listings.
AI is moving from a marketing label into measurable product behavior. Apartments.com Smart Search users spent 94.0% more time on site and viewed 63.0% more listings. CoStar is also applying AI to lease abstraction, customer onboarding, support, professional services, and commercial lending workflows.
The advantage is real, but it is not permanent. CoStar's 2025 10-K identifies competition, search-engine dependence, and AI-powered platforms as material risks. Google algorithm changes or faster product development by Zillow, Realtor.com, or specialized workflow providers could weaken traffic and pricing power.
CoStar's operating inputs are primarily data and software rather than physical inventory. The company combines public records, proprietary research, lease transactions, builder feeds, drone imagery, hotel operating data, and Matterport scans. CoStar's Australian research team was approaching 100 people in Q1 2026.
Sales capacity is a central operating lever. The company ended March with 2,090 sales employees, including 570 Homes.com representatives, 520 Apartments.com representatives, 475 CoStar representatives, and 225 LoopNet representatives. Management expects productivity to build as sales hires made during 2025 mature.
Data coverage is also expanding through partnerships. CoStar signed data feed agreements with 663 homebuilders covering roughly 75.0% of U.S. production new-home activity. Debt Solutions uses information from more than 500 financial institutions, while the United Kingdom land registry modules add government-sourced lease data.
Operating efficiency is improving. Q1 adjusted EBITDA exceeded the high end of guidance by $17M, with lower personnel costs and AI-enabled process improvements contributing to the result. The risk is that marketing, research, and sales investment remains necessary to support Homes.com and international expansion.
The U.S. real estate services market was estimated at $159.7B in 2025 and projected at $217.6B by 2031, representing a 5.3% compound annual growth rate. The adjacent PropTech market was estimated at $53.2B in 2026 and projected at $120.7B by 2031, representing a 17.8% growth rate.
CoStar's internal opportunity set extends beyond the core commercial database. Company materials identify a $9.0B opportunity across small and large property segments, a $750M Australia Homes.com opportunity, a $500M-plus United Kingdom Homes.com opportunity, and a $300M CoStar lender origination opportunity.
The market is shifting toward digital discovery, automated underwriting, rich media, and workflow software. Nearly all homebuyers use online real estate platforms, while AI, sensors, cloud systems, and digital twins are becoming more common in property operations. CoStar's portfolio gives it multiple ways to monetize those shifts.
The market opportunity is large, but residential customer acquisition is expensive. Homes.com spent $550M on net investment in 2026, and the company's earnings outlook depends on reducing that investment while sustaining traffic, agent additions, and lead quality.
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CoStar serves a broad professional customer base that includes commercial brokers, property owners, REITs, lenders, asset managers, appraisers, developers, government agencies, tenants, and hospitality operators. The breadth of the customer base reduces reliance on any single real estate niche.
Residential products serve agents, homebuilders, renters, landlords, and apartment operators. Apartments.com recorded 220 million renter visits, 370,000 tours, and 300,000 applications submitted directly on the platform in Q1. Its monthly renewal rate remained 99.0%.
Homes.com has moved beyond audience building into agent monetization. Subscribers paid to promote 260,000 active listings in Q1, equal to 8.7% of nearly 3 million U.S. homes for sale. More than 214,000 independent owners use CoStar's rental tools, and paid single-family rental listings grew 33.0% year over year.
Customer value is reflected in product engagement. Homes.com members in the initial 11,400-member analysis generated $36,400 more in average commissions during their first year, while Smart Search and Matterport users produced longer sessions and more tour activity.
CoStar is strongest in commercial real estate data and marketing. Its primary commercial competitors include CREXi, CBRE, JLL, and other providers that combine research, advisory services, marketplace exposure, and technology. CoStar's 317,000 CoStar users and 92.0% quarterly renewal rate support a strong position in the commercial information category.
Residential competition is more demanding. Zillow, Realtor.com, and Redfin have established consumer brands and large audiences. CoStar reported 108 million average monthly Homes.com network visitors in 2025, compared with 235 million for Zillow and 62 million for Realtor.com in the cited company materials.
Recent traffic data is encouraging for CoStar. Apartments.com network unique visitors rose 3.0% year over year in March, while Zillow unique visitors fell 5.0% and Zillow's expanded rental network fell 3.0%. Homes.com organic traffic increased 119.0% year over year in March.
The competitive picture is therefore divided. CoStar owns a mature commercial moat, while Homes.com remains a challenger that is gaining traffic and agent adoption. The residential investment has produced strong engagement metrics, but it has not yet produced the same earnings durability as the commercial franchise.
Real estate activity remains sensitive to transaction volumes, financing conditions, construction activity, and property valuations. The specific operating fact disclosed by management is that overall rental search demand remains soft, although Apartments.com still increased network visitors by 3.0% year over year in March.
Regulation is shaping product design. Six states require expanded rental price transparency, and the Federal Trade Commission recently completed a public comment period on similar rules. Apartments.com already supports complete monthly pricing that includes recurring and required one-time fees.
International expansion adds geographic diversification and execution risk. CoStar U.K. revenue grew 25.0% and Canada revenue grew 22.0% in Q1. France launches in Q2, while CoStar and LoopNet are scheduled to launch in Australia during Q3 and Q4. Management described the Australian market as highly cyclical, with Q1 seasonally soft.
The geopolitical exposure is modest relative to global industrial companies because the business is digital and service based, but currency movements, local regulation, employment costs, and country-specific housing cycles affect international results. The United Kingdom, Canada, France, and Australia now form meaningful parts of the expansion strategy.
Cash declined from $3.8B in Q1 2025 to $1.3B in Q1 2026 as CoStar funded Homes.com, acquisitions, capex, and buybacks, even though renewal rates stayed at 89%.
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Get Full Access →Q1 2026 revenue climbed 23% to $897M and adjusted EBITDA doubled to $132M, but FY2025 operating income was still negative $72M on $3.2B of revenue.
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Get Full Access →Management lifted full-year adjusted EBITDA guidance to $780M-$820M and adjusted EPS guidance to $1.32-$1.39 after 20% annualized net new bookings growth.
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Get Full Access →The stock’s B- valuation grade reflects a business growing quickly, but one that already prices in a meaningful recovery from only $7M of FY2025 net income.
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Get Full Access →Our price framework spans $27 for strong buy, $36 for buy, $44 for hold, $52 for sell, and $60 for strong sell, with $44 marking fair value.
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Get Full Access →CoStar Group is a high-quality commercial data business financing an ambitious residential platform. Q1 2026 supplied meaningful evidence of operating leverage: revenue rose 23.0%, adjusted EBITDA doubled, bookings increased 20.0%, and management raised the adjusted EBITDA and adjusted EPS outlook.
The medium-term opportunity rests on converting that growth into durable profit and cash flow. Apartments.com is already profitable and highly retained, Homes.com is producing stronger agent and consumer engagement, and Matterport adds useful differentiation. The main risks are cash consumption, residential execution, search dependence, and competition from Zillow, Realtor.com, CREXi, CBRE, and JLL.
At $39.72, the stock offers a credible long-term platform but not a wide margin of safety. A Hold rating and a fair value estimate of $44.00 balance the commercial moat and earnings trajectory against the still-incomplete profitability recovery.
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CoStar Group, Inc. (CSGP) falls sharply after-hours after its second-quarter revenue missed FactSet expectations, triggering a double-digit selloff. The move comes despite the company’s broader growth story across CoStar, LoopNet, Apartments.com, Homes.com, and Domain.
The Richmond Fed Manufacturing Index rose to 5 in July, staying positive for a fourth straight month but falling short of expectations. Shipments and employment improved, while new orders softened and factory price growth eased, signaling modest regional expansion rather than a manufacturing rebound.
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